I've got a rule that never fails.
It's called: RULE #1 - ALL CLIENTS LEAVE
I just got off a client call where we went over his financials and they looked pretty good. We spent an hour figuring out how to squeeze out more profitability, but then he said something...
"These clients are coming from Mr. X (obviously not his real name)."
I asked, what percentage of your revenue is coming from him?
"About 80%."
My heart stopped for a second. The first thing I said is, "You've got just one client!"
It's the worse case of client concentration I've ever seen.
Client concentration is the degree to which a business relies on a small number of customers for a significant portion of its revenue. If you've got 10 clients, but one of them is worth 25% of your revenue then you've got a dangerous level of client concentration.
20% of his income is from a few long-term clients and the rest is controlled by this one partner. And my client earns less per project than his regular clients do to the partnership.
I asked my client when the last time he brought in a new client that had no connection to Mr. X.
He guessed January. Five months he's been coasting on this relationship with Mr. X.
But if Mr. X finds a new partner, my client goes out of business.
He'll have to fire his team and he won't be able to pay his own bills from the remaining 20% even if he did all the work himself.
There's only one way to survive losing clients.
It's to always have new clients coming in.
For your business to be healthy, you need steady leads in your pipeline, some at varying stages of your sales process and preferably a few prospects sitting on a waiting list to snatch up your next available spot.
The great part about the businesses you and I are in is we don't need hundreds of customers. A small number of clients are enough to make a seven figure business.
Here's what I told my client: focus on getting a minimum of one client a month.
That's it.
If he were to get just 5 new clients that were not connected to Mr. X in any way, he would be able to survive losing every client Mr X controls.
Sure, it would suck. He'd lose 50% of his business, but he'd still be in business.
The way to always have clients on demand is to run LAPS.
Every day, block out time to get leads, appointments, presentations and sales. Watch this video on how to set this sales system up.
If you don't have steady leads, then spend time on getting new ones.
If you don't have appointments each week, then focus on converting leads into booked calls.
Not getting a chance to pitch? Then you need to work on getting people to show up to their appointments.
If no one is closing, then you need to read this.
If your business has a client concentration problem, you MUST treat it like a pending disaster, because...
Rule #1: All Clients Leave
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PS. check out the resources I've linked above. They will help you grow your business even if you're not worried about losing clients.
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